Funding Formula Idea Worries Leaders at State Universities

Funding Formula Idea Worries Leaders at State Universities

April 6, 2011/Lansing State Journal

Officials fear they might not have time to adjust

By Matthew Miller

Testifying last month in front of the House Appropriations Subcommittee on Higher Education, Michigan State University President Lou Anna Simon called Gov. Rick Snyder's proposed cut to state university funding "brutal."

She couldn't have called them unexpected.

MSU had planned for a $37 million dip in its state appropriations next year and for a tuition increase of about 7 percent to offset it, keeping its general fund budget at just over $1 billion.

Under Snyder's plan, which cuts higher education funding by 15 percent, more for individual schools if they fail to keep tuition increases under 7 percent, MSU would lose $42 million.

MSU may not get so close to the mark in 2013. That's not solely because of uncertainty in the state's finances. It's because Snyder is proposing changes to the rules.

For the past several years, appropriations for the state's 15 public universities have risen and fallen in unison.

Beginning with the 2013 fiscal year, the governor hopes to allocate university funding based on a formula that "will encourage universities to graduate a highly educated workforce in a timely manner and conduct research that contributes to the overall economic strategy for Michigan."

That formula hasn't been written yet. A spokesperson for the governor said with next year's budget still on the table, the process likely won't start for weeks. When it does, it is likely to be long and political.

But if a formula goes into effect as soon as the governor wants, university leaders say they're not sure they'll have enough time to adjust course.

"I worry about a process that devises a funding formula which is immensely complex, lots of compromises and lots of political considerations and then immediately implements it," said David Eisler, president of Ferris State University, speaking before the Senate Appropriations Subcommittee for Higher Education last month.

"If the formula is used for the budget a year from now, there will be no time for me to plan to manage where our university will be in that process."

Many concerns

Depending how the formula is written and how much of the state's higher education budget is allocated using it, many public universities could have more than a little to lose.

Take, for example, the matter of timely graduation.

While 77 percent of the students who began at MSU in the fall of 2003 had graduated six year later, only 32 percent had done so at Wayne State University, according to federal data. At Eastern Michigan University, it was 40 percent. At Ferris, 44 percent.

There are problems with the way the federal government calculates graduation rates. Transfer students don't count. Part-time students don't count.

But, as Eisler pointed out, graduation rates are also related, at least in part, to the kinds of students a university chooses to admit.

Linking funding to graduation, he said, is "tricky because you have to balance how much risk do you take in terms of taking students who have less of a chance of succeeding."

But the larger concern expressed by several state university officials is that a formula recognize that the state's universities have different missions, enroll different sorts of students, have widely varying commitments to research.

For instance, MSU, Wayne State and the University of Michigan spent a combined total of $1.2 billion on research in 2009, according to federal data.

The five schools at the other end of the spectrum together spent just over $2.5 million.

Chance to improve

A formula should be about giving universities an incentive to improve, said Mark Burnham, MSU's vice president, "not just driving everybody to homogenize to the lowest common denominator."

As for when it would go into effect, he noted that MSU does multiyear budget planning and that "it is very challenging to attempt to implement a new system, whatever that system is, if it doesn't take into consideration the planning horizons of the parties involved."

But state Rep. Bob Genetski, who chairs the house higher education appropriations subcommittee, said, "Any timeline you give them, they're not going to be particularly fond of."

The important thing, the Saugatuck Republican said, is for the state to exercise more influence over its highly decentralized higher education system.

"What's good for the public 15 all on their own might not necessarily be good for the entire state," he said.